U.S. home prices saw a record slowdown in August, falling by 2.6 percent as the Federal Reserve moves aggressively to raise rates — making it more costly to afford a mortgage.
The S&P CoreLogic Case-Shiller Index released Tuesday shows a 13 percent annual gain in August for home prices, but a sharp 2.6 percent drop from July to August. That’s the largest monthly drop on record.
“The forceful deceleration in U.S. housing prices that we noted a month ago continued in our report for August 2022,” Craig J. Lazzara, managing director at S&P DJI, said in a media statement.
“The -2.6% difference between those two monthly rates of change is the largest deceleration in the history of the index (with July’s deceleration now ranking as the second largest),” Lazzara added.
Meanwhile, the 20-City Composite index, which measures price growth in major U.S. metros, posted a 13.1 percent year-over-year gain, down from 16 percent the previous month.
“As the Federal Reserve moves interest rates higher, mortgage financing becomes more expensive, and housing becomes less affordable,” Lazzara said. “Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to decelerate.”
Mortgage rates reached a 20-year high last week, climbing to 6.94 percent and more than doubling interest rates from a year before.